Enterprise Products Partners (NYSE:EPD) has been an exceptional dividend payer throughout its publicly traded history. The master limited partnership (MLP) has increased its payout for 21 straight years, including in each of the past 62 quarters. Management fully expects that streak to continue in 2020, and is guiding for increases each quarter.

Supporting that view is the oil and natural gas midstream company's growing cash flow, which was on full display in its fourth-quarter results.

Enterprise Products Partners' fourth-quarter results

Metric

Q4 2019

Q4 2018

 Change

Adjusted EBITDA

$2.019 billion

$1.867 billion

8.1%

Distributable cash flow (DCF)

$1.63 billion

$1.459 billion

11.7%

DCF per unit

$0.76

$0.65

16.9%

Distribution coverage ratio

1.7 times

1.5 times

13.3%

Data source: Enterprise Products Partners. 

Enterprise Products Partners delivered healthy earnings and cash flow growth during the fourth quarter. Fueling those increases were the $5.4 billion of expansion projects the company brought into service last year, $2.5 billion of which it finished during the fourth quarter.

Those expansion projects helped drive record volumes across many of the company's operating groups. Overall, the MLP set 28 operating and financial records last year, including shipping 10.4 million barrels of oil equivalent per day across its transportation systems and exporting 1.9 million barrels per day through its marine terminals.

With fee-based contracts backing the bulk of its operations, Enterprise generated a significant amount of cash. For the full year, it produced $6.6 billion in cash, up nearly 11% from 2018. That gave it enough money to fund its high-yielding distribution, which it increased by 2.3% for the year, with enough left over to fund the equity portion of the $3.7 billion it invested into capital projects (or about 50%). That allowed the company to maintain its top-tier credit profile.

A person holding a bag with the word dividends on it.

Image source: Getty Images.

What's ahead for 2020?

Enterprise Products Partners expects to continue growing in 2020. Fueling that view are the expansion projects it completed last year, as well as those it will bring online this year. With cash flow on track to keep rising, Enterprise plans to increase its 6.5%-yielding distribution by another 2.3% this year, with it aiming to raise the payout by $0.0025 per unit each quarter. It will also route about 2% of its total cash flow to its unit repurchase program. That forecast implies the company will return about 5.6% more cash to its investors this year.

The MLP will reinvest the remainder of its cash flow into expansion projects. The company began 2020 with $7.7 billion of projects under construction, including $3.2 billion that it expects to finish this year. Those should give Enterprise the fuel to continue growing its cash flow until at least 2023, given their current timelines. This predictable growth, when combined with its top-notch financial profile, suggests Enterprise will have the capacity to keep increasing its distributions to investors for the next several years.  

A top-tier income stock for the long haul

Enterprise Products Partners produced another gusher of cash last year, which gave it the funds to increase its already above-average payout and invest in a large slate of expansion projects. Investors can expect more of the same this year, as well as for the next several to come, which is why this energy company is such a strong option for income investors.